Rate Cuts, Tariffs, & Market Moves! ????| Daily Report: 10/2/25
GBP
The expectation of further rate cuts by the Bank of England could undermine the Pound. BoE Governor Andrew Bailey said that additional rate reductions should be expected but that “we will have to judge meeting by meeting how far and how fast.". Bailey added during the press conference last Thursday that economic activity is weakening and the jobs market is slowing down. Markets are currently pricing in another 50 basis points of cuts in 2025.
No Key Data
EUR
Late on Sunday, German Chancellor Olaf Scholz stated that the European Union can act "in an hour" if Trump slaps threatened tariffs on the bloc. Any signs of an escalating trade war between the US and the Eurozone could drag the shared currency lower. Additionally, the rising expectation that the ECB will further cut the interest rates contributes to the EUR’s downside. The ECB policymaker, Boris Vujcic, said that anticipation for three more rate reductions this year are reasonable, even though it will take until the start of the second quarter to know with more certainty if they’ll materialise.
Key Data
USD
US President Donald Trump said on Friday that there would be an announcement later this week about reciprocal tariffs on all countries that tax imports from the US, but he did not specify which countries would be targeted or if there would be any exemptions. January US NFP data was softer than expected, with the economy adding 143K people to the workforce, below the 170K estimated. The Unemployment Rate ticked lower from 4.1% to 4%, a sign that the labour market remains strong. At the same time, Average Hourly Earnings surged, which would likely keep consumer spending strong.
No Key Data